F. No.370133\/22\/2020-TPL
\nGovernment of India
\nMinistry of Finance
\nDepartment of Revenue
\nCentral Board of Direct Taxes
\n(TPL Division)
\n****
\nCircular No. 17 of 2020
\nDated: 29th September, 2020
\nSub.: Guidelines under section 194-0 (4) and section 206C (1-1) of the Income-tax Act, 1961 –
\nreg.
\nFinance Act, 2020 inserted a new section 194-0 in the Income-tax Act 1961 (hereinafter referred
\nto as “the Act”) which mandates that with effect from 1 st day of October, 2020, an e-commerce operator
\nshall deduct income-tax at the rate of one per cent (subject to the provisions of proposed section 197B of
\nthe Act) of the gross amount of sale of goods or provision of service or both, facilitated through its digital
\nor electronic facility or platform. However, exemption from the said deduction has been provided in case
\nof certain individuals or Hindu undivided family fulfilling specified conditions. This deduction is required
\nto be made at the time of credit of amount of such sale or service or both to the account of an e-commerce
\nparticipant or at the time of payment thereof to such e-commerce participant, whichever is earlier.
\n2. Finance Act, 2020 also inserted sub-section (1 H) in section 206C of the Act which mandates that
\nwith effect from 1 st day of October, 2020 a seller receiving an amount as consideration for sale of any
\ngoods of the value or aggregate of such value exoeeding fifty lakh rupees in any previous year to collect
\ntax from the buyer a sum equal to 0.1 per cent (subject to the provisions of proposed sub-section (lOA) of
\nthe section 206C of the Act) of the sale consideration exceeding fifty lakh rupees as income-tax. The
\ncollection is required to be made at the time of receipt of amount of sales consideration.
\n3. Sub-section (4) of section 194-0 and sub-section (I-I) of section 206C of the Act empowers the
\nBoard (with the approval of the Central Government) to issue guidelines for the purpose of removing
\ndifficulties. Various representations have been received by the Board for issuing guidelines for removing
\ncertain difficu lties. In exercise of power contained under sub-section (4) of section 194-0 of the Act and
\nsub-section (I -I) of section 206C of the Act, the Board, with the approval of the Central Government,
\nhereby issues the following guidelines.
\n4. Guidelines
\n4.1 Applicability on transactions carried through various Exchanges:
\n4.1.1 It has been represented that there are practical difficulties in implementing the provisions of Tax
\nDeduction at Source (TDS) and Tax Collection at Source (TCS) contained in section 194-0 and subsection
\n(I H) of section 206C of the Act in case of certain exchanges and clearing corporations. It has been
\nstated that sometime in these transactions there is no one to one contract between the buyers and the
\nsellers.
\n4.1.2 In order to remove such difficulties, it is provided that the provisions of secti0n 194-0, and subsection
\n(I H) of section 206C, of the Act shall not be applicable in relation to,-
\n(i) transactions in securities and commodities which are traded through recognized stock exchanges or
\ncleared and settled by the recognized clearing corporation, including recognized stock exchanges or
\nrecognized clearing corporation located in International Financial Service .Centre;
\nII Pa g e
\n(ii) transactions in electricity, renewable energy certificates and energy saving certificates traded through
\npower exchanges registered in accordance with Regulation 21 of the CERC; and
\nFor this purpose,-
\n(i) “recognized clearing corporation” shall have the meaning assigned to it in clause (i) of the Explanation
\nto clause (23EE) of section 10 of the Act;
\n(ii) “recognized stock exchange” shall have the meaning assigned to it in clause (ii) of the Explanation 1
\nto sub-section (5) of section 43 of the Act; and
\n(iii) “International Financial Services Centre” shall have the meaning assigned to it in clause (q) of section
\n2 of the Special Economic Zones Act, 2005 .
\n4.2 Applicability on payment gateway:
\n4.2.1 In e-commerce transactions, the payments are generally facilitated by payment gateways. It is
\nrepresented that in these transactions, there may be applicability of section 194-0 twice i.e. once on emain
\ncommerce operator who is facilitating sell of goods or provision of services or both and once on
\npayment gateway who also happen to qualify as e-commerce operator for facilitating service. To illustrate
\na buyer buys goods worth one lakh rupees on e-commerce website “XYZ”. He makes payment of one
\nlakh rupees through digital platform of “ABC”. On these facts liability to deduct tax under section 194-0
\nmay fall on both “XYZ” and “ABC”.
\n4.2.2 In order to remove this difficulty, it is provided that the payment gateway will not be required to
\ndeduct tax under section 194-0 of the Act on a transaction, if the tax has been deducted by the ecommerce
\noperator under section 194-0 of the Act, on the same transaction. Hence, in the above
\nexample, if “XYZ” has deducted tax under section 194-0 on one lakh rupees, “ABC” will not be required
\nto deduct tax under section 194-0 of the Act on the same transaction. To facilitate proper implementation,
\n“ABC” may take an undertaking from “XYZ” regarding deduction of tax.
\n4.3 Applicability of on insurance agent or insurance aggregator:
\n4.3.1 It has been represented that insurance agents or insurance aggregators in many cases have no
\ninvolvement in transactions between insurance company and the buyer for subsequent years. It has been
\nrepresented that in subsequent years, the liability to deduct tax may arise on the insurance agents or
\ninsurance aggregators even if the transactions have been completed directly with the insurance company.
\nThis may result into hardship for the insurance agents\/aggregators.
\n4.3.2 In order to remove difficulty it is provided that in years subsequent to the first year, if the
\ninsurance agent or insurance aggregator has no involvement in transactions between insurance company
\nand the buyer of insurance policy, he would not be liable to deduct tax under section 194-0 of the Act for
\nthose subsequent years. However, the insurance company shall be required to deduct tax on commission
\npayment, if any, made to the insurance agent or insurance aggregator for those subsequent years under the
\nrelevant provision of the Act.
\n4.4 Calculation of threshold for the financial year 2020-21.
\n4.4.1. Since both section 194-0 , and sub-section (I H) of section 206C, of the Act would come into
\neffect from 1 sl October, 2020, it was requested to clarify how the varioLls thresholds specified under these
\nJI P -:’ rT O
\nsections shall be computed and whether the tax is required to be deducted\/collected in respect of amounts
\nreceived before 15t October, 2020.
\n4.4 .2 it hereby clarified that,-
\n(i) Since the threshold of five lakh rupees for an individual\/ Hindu undivided family (being ecommerce
\nparticipant who has furnished his PAN\/Aadhaar) is with respect to the previous year,
\ncalculation of amount of sale or services or both for triggering deduction under section 194-0 of
\nthe Act shall be counted from 1 st April, 2020. Hence, if the gross amount of sale or services or both
\nfacilitated during the previous year 2020-21 (including the period up to 30th Sept 2020) in relation
\nto such an individual! Hindu undivided family exceeds five lakh rupees, the provision of section
\n194-0 shall apply on any sum credited or paid on or after 15t October, 2020.
\n(ii) Since sub-section (1H) of section 206C of the Act applies on receipt of sale consideration, the
\nprovision of this sub-section shall not apply on any sale consideration received before 1 5t October
\n2020. Consequently it would apply on all sale consideration (including advance received for sale)
\nreceived on or after 1 5t October 2020 even if the sale was carried out before 15t October 2020.
\n(iii) Since the threshold of fifty lakh rupees is with respect to the previous year, calculation of
\nreceipt of sale consideration for triggering TCS under sub-section (1 H) of section 206C shall be
\ncomputed from 15t April, 2020. Hence, if a person being seller has already received fifty lakh
\nrupees or more up to 30th September 2020 from a buyer, the TCS under sub-section (1 H) of section
\n206C shall apply on all receipt of sale consideration during the previous year, on or after 15t
\nOctober 2020, from such buyer.
\n4.5 Applicability to sale of motor vehicle:
\n4.5.1 The provisions of sub-section (1 F) of section 206C of the Act apply to sale of motor vehicle of
\nthe value exceed ing ten lakh rupees. Sub-section (1H) of section 206C of the Act exclude from its
\napplicability goods covered under sub-section (IF). It has been requested to clarifY that whether all motor
\nvehicles are excluded from the applicability of sub-section (I H) of section 206C of the Act.
\n4.5.2 It this regard it may be noted that the scope of sub-sections (IH) and (IF) are different. While
\nsub-section (1 F) is based on single sale of motor vehicle, sub-section (1 H) is for receipt above 50 lakh
\nrupee during the previous year against aggregate sale of good. While sub-section (1F) is for sale to
\nconsumer only and not to dealers, sub-section (1H) is for all sale above the threshold. Hence, in order to
\nremove difficulty it is clarified that,-
\n(i) Receipt of sale consideration from a dealer would be subjected to TCS under sub-section (I H)
\nof the Act, if such sales are not subjected to TCS under sub-section (1 F) of section 206C of the Act.
\n(ii) In case of sale to consumer, receipt of sale consideration for sale of motor vehicle of the value
\nof ten lakh rupees or less to a buyer would be subjected to TCS under sub-section (1 H) of section
\n206C of the Act, if the receipt of sale consideration for such vehicles during the previous year
\nexceeds fi fty lakh rupees during the previous year.
\n31 Page
\n\u2022
\n(iii) In case of sale to consumer, receipt of sale consideration for sale of motor vehicle of the value
\nexceeding ten lakh rupees would not be subjected to TCS under sub-section (lH) of section 206C
\nof the Act if such sales are subjected to TCS under sub-section (IF) of section 206C of the Act,
\n4.6 Adjustment for sale return, discount or indirect taxes
\n4.6.1 It is requested to clarify that whether adjustment is required to be made for sales return, discount
\nor indirect taxes including GST for the purpose of collection of tax under sub-section (lH) of section
\n206C of the Act. It is hereby clarified that no adjustment on account of sale return or discount or indirect
\ntaxes including GST is required to be made for collection of tax under sub-section (IH) of section 206C
\nof the Act since the collection is made with reference to receipt of amount of sale consideration.
\n4.7 Fuel supplied to non-resident airlines
\n4.7 .1 It is requested to clarify if the provisions of sub-section (IH) of section 206C of the Act shall
\napply on fuel supplied to non-resident airlines at airports in India. To remove difficulties it is
\nprovided that the provisions of sub-section (1 H) of section 206C of the Act shall not apply on the
\nsale consideration received for fuel supplied to non-resident airlines at airports in India.
\n~…..-
\n.. ),.0 2Jf. 0 ‘1. v::>
\n(A it Jain)
\nUnder Secretary to the Govt. of India
\nCopy to:
\nI. PS to FM\/ OSD to FM\/ PS to MoS(F)\/ OSD to MoS(F)
\n2. PPS to Secretary (Revenue)
\n3. Chairman, CBDT & All Members, CBDT
\n4. All Pr. DGsIT\/ Pr. CCsIT
\n5. All Joint Secretaries\/ CsIT\/ Directors\/ Deputy Secretaries\/ Under Secretaries of CBDT
\n6. The C&AG ofIndia
\n7. The JS & Legal Adviser, Ministry of Law & Justice, New Delhi
\n8. CIT (M&TP), Official Spokesperson ofCBDT
\n9. % Pr. DGIT (Systems) for uploading on official website
\n10. JClT (Database Cell) for uploading on www.irsofficersonline.gov.in<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"
The CBDT has vide Circular No. 17 of 2020 dated 29th September, 2020 issued Guidelines under section 194-0 (4) and section 206C (1-1) of the Income-tax Act, 1961<\/p>\n
Read more ›<\/a><\/div>\n<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1,7],"tags":[],"class_list":["post-15317","post","type-post","status-publish","format-standard","hentry","category-all-information","category-others"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts\/15317","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/comments?post=15317"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts\/15317\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/media?parent=15317"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/categories?post=15317"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/tags?post=15317"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}